Euro Junk?
Just a quick post detailing the relentlessly rising spread among Euro-denominated bonds. I believe this is an extremely important development and I hope to have a new sidebar with this information soon. For a previous look at the situation, see Greek Ire.
Remember, all of these European nations are selling bonds in Euros. The only reason for the difference in yield is the compensation investors demand for the default risk.
Current Euro Zone Status:
| Nation | 10 Yr | S&P Rating |
| Greece | 5.98% | A- (downgraded Jan 14th) |
| Italy | 4.76% | A+ |
| Portugal | 4.67% | A+ (downgraded Jan 21st) |
| Belgium | 4.47% | AA+ |
| Spain | 4.33% | AA+ (downgraded Jan 19th) |
| Austria | 4.09% | AAA |
| France | 3.69% | AAA |
| Germany | 3.10% | AAA |
The United States has maintained it’s AAA credit rating – for now. Meanwhile, the more vulnerable European nations are now sliding inexorably towards financial oblivion. Greek bonds are now considered riskier than Mexican bonds, and one notch above bonds sold by the Colombian government.
I wouldn’t want to guess what can arrest the vicious cycle and save southern Europe. But if you think the stock market crash is bad… just be glad we haven’t had the bond market crash… yet…
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- Tags: bonds, Euro, Euro spread, Greece
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